Monday, September 29, 2008
Damn the GOP -- and 90-odd Democrats -- to political hell, and pour salt on their desks in Congress so nothing will grow there again
Nancy Pelosi spoke the truth, and no surprise: They couldn't handle the truth. Hang them all.
As for the Murkan sheep, of both parties: The stupid sumbitches will cling to their free-market ideology until they get their last paycheck.
Why shouldn't the market be allowed to work through things?
I've gone back and forth on this issue. My selfish side says bail the market out so it will make the pain on the newspaper economy less harsh.
But the side of me that's altruistic thinks: Let housing prices come back to earth and make people face the music on the loans they couldn't afford. And, most of all, make the banks face the music for loaning the money they shouldn't have been loaning.
That's the heart of this issue.
Why are we rescuing banks from stupidity?
But I have a hard time understanding how the market ISN'T working right now.
You know what happens in the economy when credit dries up?
NOTHING HAPPENS IN THE ECONOMY. It grinds to a halt. If you can't borrow, then no interest is paid, no liquidity is created and the money supply not only fails to expand, it contracts.
I'm FOR BUSINESS. That's why I'm FOR SAVING THE FREE MARKET FROM ITSELF.
I realize the fallout from these things takes time, but I just don't see anything earth-shattering from the bursting of a housing/credit bubble. And please remember that this was primarily about commercial not consumer credit. I recognize the reality of the pain millions of homeowners are facing - we live with it here, too - but I guess I am waiting to see if the string dangles in the air or is tied to something more substantial.
Peloser didn't need ONE SINGLE REPUBLICAN VOTE to pass that abomination.
Obviously the Socialists among us do not speak for EVERY Democrat...
Looks like you guys need to get your house in order before you blame the GOP for anything...
There may be hope for this Country yet!
The Free Market didn't cause this, dude.
What happened here is that the Government conspired with an industry and "Community Organizers" to balloon a segment of the Market out of control.
And now the balloon has popped.
Let's say that the Bailout had passed, every single Republican had voted for it, and President Bush signed it into Law, and it totally fixed the problem and made everybody happy...
But forevermore, History would refer to it as the Bush/McCain Bailout Plan, and the Republican Party would get ALL of the credit for getting it done.
Would you still be for it?
Recall, that I even -- to my shame -- supported Dubya on Iraq, right up until I and millions others realized we'd been duped.
Note, that my damnation in the headline includes the Dems who voted against it. The GOP is a special case, because, in my opinion, the party itself, by majority vote in the House, put ideology ahead of the damned country.
As for saving the free market from itself: I didn't stutter.
Now, pop them. The bubble itself doesn't disappear; the air dissipates, but the soap goes off in all directions, some in big pieces, some in small pieces.
The issue before us now is not the bubble, or bubbles, before us. The issue is where that soap goes.
Whatever the reason for the bubble being there, it's gone now but all that soap is still flying off in all directions gumming up works in the economy that we haven't even realized yet.
Want home prices to correct? Cool. They should. But every other thing based on those inflated home prices, every financial instrument of securitization, which spread from mortgages to car loans to consumer credit to whatever else, also will contract.
Think deflation. Falling prices, and falling wages, which sound good in theory -- but the wreckage thast comes with it, if not controlled somehow, means chaos.
Pelosi was impolitic with her speech today. She scolded the House -- not just the GOP was CONSERVATISM and the free market itself. She should have waited. She, I guess, was trying to rub conservatives' nose in it. I agree with what she said, but good Lord, I wish she'd waited.
But the fact remains: She said some hard words. And he majority of the GOP put their own damned feelings -- and their false idol, the free market -- ahead of their country.
As far as whether or not this particular form of a bailout was needed - I think it would have been far better to nationalize the whole kit-n-kaboodle, a la RFC. Or even do nothing, which is what has happened. If the economy tanks because of this, well I will admit I was wrong. As far as looking in the right place, it seems to me that, with so much value disappearing on a daily basis from so many sectors of the economy, all sorts of commercial credit would disappear, and certainly consumer credit as well. Talking with a local banker, he doesn't see it. He's still lending, and hasn't called in a single commercial or consumer loan yet, and doesn't foresee such a possibility because his bank is insulated from the kind of fluctuations going on right now.
An increase in the bond market via a huge bailout - all that public paper suddenly appearing, with little real prospect of its maturity - however, is a different story. I'm not suggesting that things are rosy. All I am saying is the sky is not falling, either. We need to shake this box of crumbs very carefully to see where they fall.
As far as whether or not tugboatcaptain's right on who gets the blame for this, I prefer to give them CREDIT for consistency and preventing this bill from passing; and not only this time, but probably any time before the election. Can't believe I'm saying this, but I'm grateful for the Republicans little hissy fit.
Credit is tightening now for the people you, and I, and Tug, work for. We will feel it in the loss of jobs, and in rising interest rates, and in further economic stagnation, and such.
Construction projects and investments are stalled in their tracks even here, where the economy, including housing, is in good shape compared with the rest of the country -- not because the local economy is on the downswing, because it is not, but because deals have gotten so tight because lending for major projects has dried up. Local and regional banks with balls will take up some of the slack, but not all.
On the other hand, one construction executive I know told me that the slowdown ha scome just when Oklahoma has scared off so many illegals -- so maybe there is method to the conservative madness, after all.
Now, as for the bailout. The GOP has said it's piece, and has handed their own president's fears to the opposition party. So, what I want to see if the Dems load a rescue bill up with everything the president and the GOP has removed from social legislation and dare Bush to veto it. Then, it'd be a real Democratic bill.
Bipartisanship had its day today. Now, let the Democrats bray and fix this crap and clean up the conservatives' mess. Again.
There WILL be a bailout deal.
It might have to wait until Thursday of Friday, or even next week, but there will be something.
I hope that you are starting to see that Pelosi is not quite ready for Prime Time (a condition that is prevalent right now both in Washington, and in the Presidential Campaigns, on BOTH sides...)
I know that to just let the bubble burst will cause pain and suffering in various places and for various people.
But if you think that this Bailout deal would(or that the next one will) help any poor, oppressed homeowner keep his mortgage up to date, then you, my friend, are sadly mistaken.
All that a Government Bailout Plan will do is print a trillion Dollars that there is nothing to back up, and prop up the institutions which made these bad loans and keep them in business so that they can foreclose on even more bad loans.
While they split up a trillion dollars among themselves.
It will keep housing prices unreasonably high, and de-value the Dollar to the point that nobody will be able to afford their house, no matter what their situation. (Even if their house is paid-for, free and clear, it will keep property taxes artificially high by not allowing foreclosed houses to recirculate back into the market at fair market value.
I never figured you to be the type to get mad because the Government voted not to subsidize the very rich with taxpayer money, ER.
But that's the position this post has taken.
As for me wanting to see more money line the pockets of the rich: The fact, while I rail against unbridled capialism, I know how it works, and the real irony here is that you, who bow your knee to the free market, seem oblivious as to how it works.
Capitalists require capital. To grow an economy requires liquidity. Liquidity means lending. Lending increases the money supply. And that's the biggest part of economic growth.
What we got here, to mix my counterintutive metaphors, is a rickety house that's on fire. And I think we got to prop it up now, to keep it from collapsing.
Then, we can put out the fire. Then we can dismantle these bullshit kind of securitized nothings that got us here.
And I will keep correcting you on this point as long as we discuss this particualr subject...
Conservatism did not build this shack, nor did it set the fire.
Were it not for Democrats, there would never have been a shack, a fire, or any need to prop the shack up, nor put out a fire.
This is a direct result of Democrat Social Engineering, and Democrat Corruption and Influence Peddling.
Started with Carter, grew under Clinton, reached critical mass under Reid and Pelosi, Frank, Dodd, and Obama.
That's the fact, Jack.
Gad Zooks fellows, no imaginations heh?
So I tell you how this will go.
First that remnant amount of my retirement in stocks, I will see shrink by 80%. Not to worry I only put stuff there that was loseable.
We will get a totally Democratic, regulatory, Populist Bill through the House and Senate now and GWB will have to sign it. Latter under the new Democratic administrations FDR will look like a piker.
These efforts will slow things down, but they won't stop them completely. The Market will have its way. The World Market that is. It is about FULL FAITH and CREDIT. Violate the faith in the system and the credit goes away.
Inflation will set in immediately and your money will cost you in the double digits to buy. Want credit then pay 21 to 24% or more for it. I will be buying short term CDs at 20% returns reaping in your payments.
Gasoline will go to $6.00 per gallon within the year and my family strip well revenues will double. Every mother's son will panic and think that they won't be able to get any fuel oil or gasoline and will actual create the situation where they can't. See the SE U.S. as of today do you?
All you have to do in America to create a supply crisis in gasoline is to fill every tank up to 3/4 full. That will dry up every gas station storage tank in America. For real, yep, it is just the math of it.
There will be a whole shit load of really nice used cars to choose from in a few months at my Credit Unions repo-compound and I will buy a pickup truck and a nice road car for 30 to 40 cent on the dollar with loans from the Credit Union at the same rate that my CDs are earning.
All of my annuities and deposits are Federally insured and my State level retirement will not suffer much because we have all these damn oil revenues to use. (Drill Baby Drill Please.) Oh yes and my Social Security will be there for me cause the Republicans have been lying about the short fall and because the new Hispanic American citizens will be paying into it.
The tragedy will be for my adult children who won't be protected as well. But I will be their safety net.
So it won't so bad guys, just as you say, at least for me it won't.
So if you are correct and I'm wrong, it's OK for us. If I'm right and you're wrong it's OK for me. Jeez don't I sound like a Republican now?
Dang if you guys don't sound just like Lou Dobbs.
The value of the shack itself is not the point. The point is that sumbitch is on fire and is fixing to fall and it'll start a wildfire that'll burn neighborhood and neighborhood after neighborhood.
The populist uprising against this is about the most amazing display of broad-based ignorance about financial affairs since the populist anti-central banking hysteria that put Andrew Jackson in office. GOD HELP US.
But lately I don't know what has gone wrong with you.
I can't decide whether you are just trying to get ER to like you, or you've gone over the deep end with him.
In what way does ER have any of this right?
He blames the Free Market for this mess when there was absolutely nothing free about the market that led to this.
He bitches about the influence of the GOP and Conservatism, when the GOP and Conservatives screamed about this for YEARS while it loomed on the horizon, and Democrats killed legislation that might have averted this disaster and said repeatedly that there was no problem, and Feddy and Franny were just fine.
You are right, however, about how all this will play out.
There WILL be a bailout, and it WILL cause inflation and high interest rates, it WILL ruin the Economy, cost a lot of people their jobs, their investments and their retirement funds, it WILL cause foreclosures, reposessions, and raise the cost of living across the board.
But it will be the Democrats' fault, and the natural result of Socialism and Social Engineering, and the subsequent attempts to fix the problems that that type of hogwash inevitably causes.
If we HAD a Free Market, then maybe this could be blamed on the Free Market.
But we don't.
Thank you very much, Dems.
I hope you all are happy.
You, yourself are proof enough of THAT, ER.
But we can see the results already. In my little town, we’ve seen car and house sales slow down drastically this week. My real estate and car sales friends are concerned. They support their families by commission. And if it’s happening in my little town, I suspect it’s happening everywhere.
Yeah, I hate the bailout. Hate it. But the consequences of letting the system crash are much worse. I’m hoping the bailout will give the financial system time to repair itself. Naturally I doubt it, but any hope is better than no hope.
For an interesting look at how the so-called Free Market -- uncontrolled, reckless, and greedy -- plunged the world into the Great Depression, see David M. Kennedy’s “Freedom From Fear: The American People in Depression and War, 1929-1945,” from the Oxford History of the United States. At 936 pages, it’s not a light read – and Kennedy seems to lack the ability to write a simple, clear sentence – but it’s worth the effort, if only to show how eventually we struggled our way clear. (By the way, Kennedy is no relation to the Kennedy in Congress, just in case someone drew a mistaken assumption about his name.)
My wife says that she will put up three Obama/Biden signs in our yard for every one of my Ron Paul signs.
We lost 1.2 trillion dollars today, probably we will lose 3 trillion dollars in the next two days. Thursday/Friday there will be a bill passed that will be Tug's worst possible political nightmare.
No the American public does not understand this, nor will they ever understand this.
By the next election, Paul is going to look real good.
15% of the Nation's gasoline supplies is trapped at any given time in our pipelines and supply delivery systems.
Makes me want to puke. It really IS like effed-up religion to these idiots, and they'd rather cling to their dogma than spread the actual Good News.
Our President is on the air. He is now talking about the loss to retirees. Congress must act, he says. Fear and wolf, wolf, wolf.....
R.I.P. the American Dream?
With these words of encouragement will the market go up today? Ha!
Note that the Pennsylvania Higher Education Authority is looking at insolvency.
Damn it to hell, this is going to be a hard, hard, hard lesson for me and my fellow American peeps.
And damn Dubya for lying so much nobody dares believe him or his guys when the s--t really IS hitting the fan.
Dude you are treasure of the organization. Maybe we should have more meetings.
"If we could play this right, it could spell the end of both extremes, left and right"
Naw, no way.
In fact these two entities did not turn sour until they were free from being a govern entity and deregualted and had acquired stockholders who wanted profits. In point of fact they didn't lend money for mortages they bought existing mortages bundled them and re-sold them.
It was the "adjustable rate" mortgages that became the killer in all of this. Loan officers gave mortgages to those who could afford the low start up payments without regard to whether they could afford the future jump ups in payment. Also investors wanting to flip homes thought they could pay the intial low adjustable payments and sell it off at a profit before the larger payments came into play.
What all these people hadn't counted on was that these people borrowing the money were in an economy going into the toliet. No matter what they did it wouldn't be enough to match the inflated payments of the adjustable rates. Some Banks did count on that as it turns out, because they wanted to forclose and take back the property for resale, Trouble there was they too got caught in the delima in that no one was there to buy their foreclosed houses.
Criminal greed taking advantage of the America Dream to swindle the dreamer.
Don't try to argue facts with tugboatcaptain, for the simple reason that he doesn't care about facts. He's got his "proof" for what happened, and there's no reason to look any further.
BTW, have you seen news reports that the Newtster was the one to throw the monkey wrench in to the works in the House yesterday? Holy crap!
One last item. On the size of the bailout. Yesterday, the House rejected $700 billion. The Dow Jones lost 700-odd points, and the markets as a whole lost $1.1 trillion in value. While they're back up today, I think it is important to remember that whatever dough we toss the way of the financial markets will most probably not be enough to get us out of this whole. Systemic assistance - maybe a new alphabet soup-style public works regime, a la the CCC and PWA (all those infrastructure projects that are in dire need) to put people to work and pump money in to the economy?
"In fact these two entities did not turn sour until they were free from being a govern entity and deregualted and had acquired stockholders who wanted profits."
I disagree. The Clinton Administration made changes in 1995 which allowed Freddie and Fannie to hold 2.5 percent of capital back to their investments (as opposed to 10 percent, like most banks). The CRA was rewritten in 1993 (and took effect in 1995) to encourage banks to process loans more aggressively and use a 1-30 loss rate, setting up a time bomb if the market bubble burst, which it did. Freddie and Fannie bought these loans until 2007, and owned up to half of all home mortgages.
The Bush administration acted on many occasions to rectify this by recommending a new agency under the Treasury department to supervise these sub-prime loans. Freddie and Fannie were of specific concern. The Democrats, led by Barney Frank, did not agree with the administrations concerns, and wanted to continue to protect the access to low income housing. I'll quote from the New York Times. Sept. 11th, 2003:
''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''
Here's the long link (apologies!): http://query.nytimes.com/gst/fullpage.html?res=9E06E3D6123BF932A2575AC0A9659C8B63
There will be plenty of fingers to point on the right (and left) regarding following the money trails of Wall Street, and financial contributions. One could argue that the Bush Administration did not sound the alarm loud enough , or get legislation passed while he had a majority. Why? 'Cause most of capital hill is dirty on this one, in my opinion. I'd like to see some serious congressional hearings, and some books to be opened up before we go any further with writing a 700 billion C.Y.A. check, to those who were irresponsible enough to let this crap happen in the first place.
That has little to do with the spirit, or really, the letter of the CRA.
That's under regulation. Forgive me is I'm suspicious of any Republican attempt to "improve" regulation. The GOP quits bashing government in general, I'll lend 'em a more recptive ear.
There will be jail sentences here, mark my words. I hope there will be some removals of incumbents as well.
The saddest (most infuriating) part is that the very people that the democrats were trying to help, are going to be the most screwed.